Kansas Works--Work Opportunity Tax Credit

Published by KCEDC on Tue, 10/04/2016 - 10:12am

Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers who hire and retain veterans and individuals from other target groups with significant barriers to employment. Employers claim about $1 billion in tax credits each year under the WOTC program. There is no limit on the number of individuals an employer can hire to qualify to claim the tax credit. WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers

WOTC helps targeted workers move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are able to reduce their income tax liability.

The maximum tax credit amounts depend on the wages paid to the new hire, the new employee's target group and the number of hours worked during the first year of employment. The tax credit amounts range from $1,200 to $9,600.

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that extends and modifies the WOTC Program. In summary, the PATH Act:

· Retroactively reauthorizes the WOTC program target groups for a five-year period, from December 31, 2014 to December 31, 2019.

· Introduces a new target group, Qualified Long-term Unemployment Recipients, for new hires that begin to work for an employer on or after January 1, 2016 through December 31, 2019.

There are approximately 5,873 Employers’ in Kansas that utilize the WOTC program. The WOTC unit averages 38,000 applications a year.